Consumer Credit Bill

moved Amendment No. 34: Before Clause 62, insert the following new clause—    ““EXTRA-TERRITORIAL APPLICATION    In section 75 of the 1974 Act (liability of creditor for breaches by supplier) after subsection (5) insert— ““(6)   The liability of a creditor under this section shall also apply to a transaction effected after the passing of the Consumer Credit Act 2005 outside of the United Kingdom as well as to one effected within it.”””” The noble Baroness said: The amendment seeks to amend—or perhaps according to some to clarify—the provisions of Section 75 of the 1974 Act. Section 75 provides that if a debtor—a credit card holder—had a claim against a supplier in a transaction where he had paid with a credit card, he also had a like claim against the credit card company. The credit card company is given a right of indemnity against the supplier. I shall not take up any time in detailing the arguments in favour of this provision when the 1974 Act was passed. It is sufficient to say that it was to give additional protection to the customer, who is seen as the weaker party to the transaction. It concentrates the minds of the card companies on the suppliers to which they grant the cachet of being one of their sanctioned merchants, as they call them. The fact is that the section has been in force for some 30 years. I have no idea how many times this provision has been invoked, but I imagine that claims under it have been quietly disposed of behind the scenes without recourse to the courts. However, there is a problem in the interpretation of the provision. Although the entire clause provides specific exceptions, some credit card companies insist that there is an additional one that is not included in the 1974 Act, but which they argue is there by implication. They argue that the provisions of Section 75 do not apply to credit card transactions that have been effected abroad. The 1974 Act does not provide such an exemption, but it is just as likely, if not more so, to be required for those transactions taking place abroad. If it is hard to get redress from a shop in your local high street, how much harder it must be in the case of some bargain purchased with a credit card from a market stall in a Mediterranean resort, or even from a swish, smart store in a major overseas shopping centre. The long arm of the local trading officer does not extend to the south of France or the Costa Brava. Credit card companies have the power to get the customer redress simply by the threat of withdrawing the credit card facility from the trader. The point is that credit card companies make great play in their advertising of the convenience of being able to use their cards anywhere in the world. Since Parliament, in its wisdom, 31 years ago, gave United Kingdom credit card users the protection of a line of redress against the companies that were, in effect, financing the transaction, it should now take this opportunity to close a rather dubious loophole or ambiguity that the card companies claim exists. The amendment makes it clear that the protection given by Section 75 of the 1974 Act to users of United Kingdom credit cards extends to transactions abroad as well as at home. I beg to move.